Beacon announced it entered a definitive agreement to sell its interior products business to affiliates of private equity firm American Securities for $850 million. Beacon’s interior products business consists of 81 branch locations that distribute wallboard, acoustical ceilings, steel framing, and insulation to residential and commercial contractors. The transaction is expected to close during Beacon’s fiscal 2021 second quarter.
Beacon said it intends to use the anticipated after-tax proceeds of approximately $750 million from this divestiture to reduce net leverage and strengthen its balance sheet.
American Securities recently acquired specialty building products distributor Foundation Building Materials in an all-cash transaction.
“Today’s announcement represents an important strategic decision for Beacon,” Julian Francis, Beacon’s president and CEO, said in a prepared statement. “After undertaking a thorough analysis, we determined that a divestiture of interior products is in the best interests of our shareholders, as well as our interior customers and associates.”
Francis said the transaction will accelerate Beacon’s efforts to improve its balance sheet, reduce net leverage, and provide financial flexibility for future strategic growth initiatives in its core exteriors business.
“We are excited to have reached an agreement to acquire Beacon’s interior products business,” Kevin Penn, a managing director of American Securities, said. “Following the November announcement of our take-private of Foundation Building Materials, this follow-on transaction represents an exciting opportunity to combine two companies that have made customer service their highest priority. The combined company’s expanded geographic presence across the U.S. and Canada will enhance its partnership with customers, vendors, and team members.”
Beacon’s interior products business generated $1.03 billion in net sales, a net loss of $11 million, and an adjusted EBITDA of $73 million during the fiscal 2020 year.
Herndon, Va.-based Beacon is a distributor of roofing materials and complementary building products, with over 500 branches throughout all 50 states and six Canadian provinces. American Securities is based in New York and the company and its affiliates have approximately $23 billion under management.
